Last week, the Ghanaian cedi remained stable against the US dollar as lower-than-expected US inflation data led to a weakening of the American currency against several emerging market currencies, including the cedi.
This resulted in a modest 0.13% week-on-week gain for the cedi, ending the week’s trading at a mid-rate of GH¢15.93 per dollar.
However, stronger economic data from the Eurozone and the UK caused the pound and the euro to appreciate, leading to the cedi losing 0.86% and 0.58% week-on-week against the pound and the euro, respectively.
The cedi is expected to find some relief this week from the Bank of Ghana’s (BoG) 7-Day Forward Auction Initiative.
This initiative, launched last week, allows banks and authorized foreign exchange dealers to bid for foreign currencies with a settlement date seven days after the auction.
The move aims to replace the spot market intervention and is expected to complement the Bulk Oil Distributing Companies (BDC) auction, helping to alleviate demand pressures in the foreign exchange market.
In the first auction under this initiative, the BoG sold approximately $53 million, which contributed to a 0.29% day-on-day gain for the cedi against the US dollar. Analysts suggest that this development could help the cedi maintain stability in the coming weeks.
Currently, the retail market shows one US dollar trading at GH¢15.90. Since January 1, 2024, the cedi has depreciated by about 23% against the dollar in the retail market.
